I’m co-founder and Managing Partner at RSR Research. I’m a lifelong retailer and have been involved in retail tech for more than 30 years both as an IT practitioner and as a tech analyst. It’s a great time to be me, as consumers drive retailers to re-create the customer experience and ultimately re-invent retail. I received my MBA in 1991 from Northeastern University, with a major in management of High Technology firms and was nominated to the Beta Gamma Sigma honor society. I’m active in a variety of organizations supporting human growth and development. I’m also an amateur photographer. You can follow me on Twitter @paula_rosenblum.

Washington City Council's Stiff-Arm To Walmart Shows Expansion Game Has Changed

Last week, the Washington DC city council passed a bill called the Large Retailer Accountability Act (LRAA) of 2013. The bill requires retailers with gross annual sales of more than $1 billion to pay workers an hourly wage of $12.50 an hour, vs. the District’s minimum wage of $8.25 (which is higher than the national minimum wage). Upset with the bill, Walmart first threatened and then confirmed it was canceling the build-out of three new stores in the DC area if the bill becomes law.

While the final dispensation of the bill remains unclear (it can be defeated either by DC mayoral veto or if Congress uses its local control to override the vote) I was most intrigued by the statement of one of the bill’s backers on the council. According to an article in Chain Store Age, council member and bill supporter Vincent Orange said in part (italics and boldface are mine) “We’re at a point where we don’t need retailers. Retailers need us.” Boom! What a turn about!

Let’s take a look at Walmart’s history. The company’s founder, Sam Walton, had a goal to bring low-cost commodities to small towns, which he believed were under-served by the retail industry. He met his goal and then some. Walmart certainly brought low-cost commodities to the masses. Small towns often would feel like they’d “made it” if a Walmart opened in their town. The products sold were definitely affordable if not sexy. Of course, other small towns were quite literally decimated by the arrival of what became the big box giant. Local retailers just couldn’t compete. Towns fought against Walmart openings, and were mostly unsuccessful. Just like retailers couldn’t compete, opponents couldn’t compete with the promise of jobs and opportunities for customers to “save money and live better”.

We can debate whether Walmart really did help those small town citizens live better, but that’s not the point of this piece. Times have indeed changed. For one thing, the small town market has long since been Walmart-ized, and the retailing giant has been taking its act to “the big city” around the US and the world for more than a decade. For another, the world of digital commerce has made just about everything available to just about every hamlet…everywhere. And that’s what makes Mr. Orange’s statement so profound. “We don’t need retailers. Retailers need us.” Could Sam Walton possibly have envisioned that?

Mind you, it’s not time to stage a telethon for Walmart’s benefit. According to the Stores Top 100, in 2012 Walmart had revenues of $328.7 BILLION (70% earned in the US), more than three times the volume of number 2 Kroger ($92.1 billion), 4.5 times the revenue of number 3 Target ($71.9 billion), and almost 10 times the revenue of number 10 retailer McDonalds ($35.6 billion). According to Business Insider, if Walmart was a country, its annual revenue would be on par with the 25th largest GDP in the world. I suppose if push came to shove, the US would declare Walmart “too big to fail”, just as it did for banks and the auto industry.

But Mr. Orange basically spoke for the entire world of consumers. We really don’t need any more retailers. The United States remains incredibly over-stored even as digital channels continue double digit compound annual growth rates. Only the savvy will survive and thrive.

What do I think a savvy retailer looks like? My company, RSR Research conducts twelve retailer surveys each year to get a sense of the business challenges they face, the opportunities they see to overcome those challenges and the technologies they use to take advantage of those opportunities. We find that those who over-perform on year-over-year store and channel sales, those we call “Retail Winners” tend to think and act differently than their competitors.

Here are a few summary points from that research:

Retail Winners have a relentless focus on their customers

Retail Winners tend to look within for solutions to their problems. They don’t follow the competition. They focus on consistent execution in stores and a consistent experience anywhere that they market or sell (on-line, in stores, and on social networks)

Increasingly, Retail Winners also attend to the communities they live in, and the employees that work for them

Retail Winners use technology to support improved business processes. They don’t expect technology to solve unaddressed process problems

Retail Winners don’t just battle on price. The real battleground of 2013 is Customer Service. It is the single hardest commodity to find. “Fast fashion” retailers like H&M and Forever 21 compete on cheap chic, but service is still an important element of their offering

The bottom line here is pretty straightforward. Whatever the outcome in Washington, DC, two things are clear. As a shopper, I know that I am indeed in the catbird seat. As a retailer, I think I’d put Mr. Orange’s quote on banners in my home office, call centers and stores. And probably tread a bit more lightly when entering a new market. Because the game has changed forever.

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Appalling! Everyone knows the cost of living and retail prices are exorbitant in D.C. No one forces the people who work there to take a job and setting a wage higher for them because they are larger, work on lower margins, and save people a ton of money is Un-American. Apparently no one takes Economics in college anymore. ANY TIME you mess with wages and prices it throws the system out of balance and creates issues.

Living in parts of DC is no better than marginal to begin with and the arrogance of officials who deny people access to choices that will save them money is irresponsible at best. By the way I never have worked for Walmart, although I did work for Target while I was going to college.

Just curiously DVZ, what exactly makes you think Walmart works on lower margins? Seen their 10K lately?

And for what it’s worth, the world of eCommerce has already thrown the system “out of balance.” It’s called disruption, and it is the same type of disruption that Walmart itself threw into the retail ecosystem as it got larger and larger.

“Access to choices that will save them money”? By what standard? Why do you believe Walmart has lower prices than, say, your former employer? Or Amazon?

I’m just curious. I don’t have much of a horse in this race, but I’m really curious where you get your data from.

Margins to the consumer are irrelevant. Consumers will buy where prices and service (convenience, selection, etc.) meet their needs. Dictating wages for some and not others, will protect some (ma and pa operations) who cannot source their goods as economically, and harm others. If the wages are too low, labor will be scarce. Let the free market system do its work. This is one time when government causes more problems than it solves. Go elsewhere Wal-Mart and let the councilors lie down in their beds. Maybe they should dictate selling prices at ma and pa stores.

Paula, you need to compare Wal-Mart’s margins with those of the ma and pa operations and not draw conclusions by just looking at Wal-Mart’s financials. Who are you to say that Wal-Mart’s margins are high and by what standard? Wal-Mart’s 10-K makes no comparison to margins of DC ma and pa operations. If Wal-Mart did not have lower prices they would not have driven out many small retailers in small communities who could not buy as cheap as Wal-Mart could sell. Talk to the displaced retailers if you don’t believe that.

I believe you. I also think this is an interesting response by the community. You will note that I was basically replying to DVZ, who implied that by raising the minimum wage consumers were being denied choice. I don’t buy it.

I think DVZ is the smartest person on this board!!! You can’t change the rules in the middle of the game. This sounds like China. Let a store open up and then say, “Oh, now you have to pay 50% more because you are a large corporation”. D.C. is so expensive and everyone who is there needs the opportunity to buy affordable items. Walmart pays the going wage in whatever area it locates —this is ECON 101. I vote DVZ for president. He/she has more sense than anyone else posting on this article.

The comment “Retail….that makes NOTHING” is erroneous. Retailing facilitates the distribution of goods to where they are needed and wanted, thus creating value. Nothing has value if it is not where it is needed or wanted.

I agree 100% that if you can afford to pay livable wages you should pay livable wages. There is no reason Americans all over should have to continue to pay for assistance programs so certain people can live in excess. We as people are making up the difference so their employees can live healthy lives and provide the services needed to earn any money called food, clothing and shelter and good health. Me and you as American citizens are basically paying for those mansions, mercedes, yatchs, jets, prada, gucci and so on by covering their employees basic needs. If these people can write millions in bonuses they can sure write higher paychecks so we as the people don’t have to. Just saying. We the people are being taken advantage of as a whole. These programs must exist otherwise lifestyles collapse, property values crash, and shanty towns take the place of what use to be safe secure neighborhoods. It has already been written in American history. Take a college class and learn about how life was back then. Look we are really going backwards not forwards. Lets try to correct this by spending a little time thinking outside ourselves. We really should stop being so greedy, shallow and selfish with an extra bite of spite and anger. I get it, work is hard and if you do so you should be rewarded but so should everyone else who puts in the work as well. No matter how low on the totem pole otherwise its taking advantage of people. Now we don’t need to go all Socialist or anything but we do need to really look at how we treat each other and show a little more respect towards Americans who choose to work whether it be a Wal-Mart, Target or some corporate office. It’s just the right thing to do. And what I would expect out of the self proclaimed greatest country in the world. Otherwise whats so great about a nation where the world somehow revolves each citizen separately. Individually we will fall one by one but together anything is possible. It’s time to come together and show the world we actually can set an example. That way people all over really will stand up against tyranny and we really can one day experience what peace is really like.

I hope Wal-Mart does not build in DC, then Mr. Orange’s and other councilors’ constituents can shop elsewhere as they have always done, including on the internet which will give their city no jobs. I guess Mr. Orange and his colleagues do not believe in the free enterprise system but prefer a dictatorship instead. Maybe they can dictate a clean and honest city.

Retail has not changed except for on line sales. If On line sales are not going to be taxed, then states will be losing out on tax revenue. To say we “don’t need retail”—that is plain dumb. Consumers need affordable goods and groceries. To pass a law that only penalizes large corporations is saying—-”This is America and we only like mom and pop shops. If you grow too big, we will make you pay for it”. D.C. can rot as far as I am concerned if that stupid law is passed. I hope Walmart rings the city with supercenters and all the money flows out of D. C. to the Walmarts in the surrounding areas. Capitalism works well to leave it alone. If D.C. wants to raise the minimum wage to $12.50 for all, that is fair, but to raise on large corporations and leave the small ones alone, is unfair and I hope if that happens, that Walmart files suit immediately and sues for damages.